Supreme Court of Ireland Decisions

Hardiman J.
O’Donnell J.
McKechnie J.

Between:

Judgment of O’Donnell J. delivered the 30th day of July 2012

1 This appeal marks the latest stage in a legal battle between the parties in respect of events that occurred more than 20 years ago. In a lengthy judgment delivered on the 8th October, 2007, Feeney J. awarded to the plaintiff company the sum of €2.45 million by way of general damages in respect of a breach by the State of its duty to grant to the plaintiff company a licence for the importation of 277 tonnes of GATT meat for the year 1990. The plaintiff (“Emerald”) has appealed against the award and the defendant (“the Department”) has cross-appealed.

2 The methodology ultimately adopted by the trial judge in calculating damages was relatively simple. Since Emerald had effectively ceased trading, the claim was for loss of profits from business which was not carried on over the succeeding years. This is a necessarily speculative exercise. Having rejected the primary submissions made by both Emerald and the Department as to the correct approach to this calculation, Feeney J. accepted that an appropriate method was to seek to measure Emerald’s loss by reference to a comparator business that had continued to trade in the market in which Emerald claimed it would have traded and thrived but for the wrongdoing of the Department in 1990. He accepted that Emerald could be compared with another meat trading company, NWL, which had traded since 1990. On the approach taken by the judge, 1989 was the last period during which NWL and Emerald were both trading in a market unaffected by the Department’s wrongdoing. During this period NWL was some seven times larger in turnover terms than Emerald. In addition, an adjustment was made to the available turnover figures for NWL to arrive at a turnover for the period matching Emerald’s claim, that is for the period between 1991 and 2001. That process produced an adjusted turnover figure for NWL over the period of IR£402.5 million. Applying a one-seventh ration to that would suggest a turnover for Emerald of IR£57.5 million. From that figure was subtracted a figure for turnover of Emerald actually achieved between October 1990 and September 1991 of IR£4.9 million, leaving an estimated loss of turnover of IR£52.6 million. There was some dispute as to the appropriate net profit margin to be applied. The court applied a figure of three percent because it accepted that it was probable that Emerald’s overall profit margin would have been higher than the margin achieved within the Irish industry as a whole including NWL, or indeed that of Emerald London, a company closely related to Emerald. The application of the three percent profit margin to the net turnover figure produced a loss of profit figure of IR£1.578 million as of 2001, which converted to a figure of €2,003,346.60. The trial judge also accepted that Emerald was entitled to interest on that amount to compensate for the fact that damages assessed as of 2001 were being awarded in 2007. In the words of the trial judge, the figure for interest was not an exact calculation “but represents a realistic approximation that results in a total figure of €2,450,000”. This is indeed an apt description of the process of calculation of loss as a whole. It is apparent therefore that there were a number of assumptions underlying the assessment of damages in this case. To understand how the judge came to assess damages in this way, and indeed why he was engaged in assessing general damages for the period 1991 to 2001 and the criticisms made by both parties to the outcome, it is necessary to set out in some detail the background to this litigation.

3 It can be said that the history of Emerald has been one of a relatively short period of successful trading in a niche market, principally between 1986 and 1989, with a very protracted period of litigation thereafter. One of the few beneficial by-products of this process is that the background to the dispute has been the subject of consideration in judgments of Irish courts, and indeed courts further afield. For a very detailed and lucid account of the circumstances giving rise to Emerald’s first claim, reference may be made to the comprehensive judgment delivered by Costello J. on the 9th July, 1991 and reported at [1992] 1 C.M.L.R. 462. That judgment was upheld in a unanimous judgment of the Supreme Court delivered by Blayney J. and reported at [1997] 1 I.R. 1. What follows is therefore a necessarily truncated account of a complex dispute.

4 The origins of this dispute lie in the Common Agricultural Policy of the European Community, in particular as it affected Ireland in the late 1980s. The structure of the Community at that time required the removal of internal barriers to trade, the support of prices for Community produced agricultural products, and the imposition of tariffs on imports. Beef was a particularly important product in Ireland because as of the time of this dispute Ireland was a net exporter of considerable quantities of beef. This difficulty was compounded by the fact that in Ireland, the beef trade was predominantly grass based, and therefore suffered from a problem of seasonality of supply. The advent of the European Community with an enlarged market for the beef being produced in Ireland, together with a market support mechanism, had a very significant impact upon Irish cattle producing and meat processing businesses, which rapidly adapted to the fact that developments at the European Community level would have very significant impact upon the opportunities and profits available.

5 The meat business in Ireland was competitive and tough. It involved large cash flow, small profit margins, and required a continuous ability to match fluctuating supply from farmers with the demands of a large number of disparate customers. It has been characterised by considerable success and spectacular failures. At a micro level, the purchase of cattle at too high a price, or the sale of the meat at too low a price, or the failure to sell all the meat produced, could each destroy any profit margin, and rapidly render a business unprofitable. One consequence of this was that meat traders could operate successfully in a market with such continuous fluctuations, since they could seek to match potential customers with suppliers of meat which those suppliers needed to sell.

6 Emerald was effectively a one man business. Mr. John McCarthy was an able businessman. As a young man in 1975 he became involved in the meat business and learnt the business of meat trading. In 1983 he set up his own business as Emerald Meats. The relative success of the business is illustrated by the fact that the credit facilities allowed to the company by his bankers steadily increased from a figure of IR£20,000 in the early stages to IR£200,000 by 1989. In the words of the trial judge, Mr. McCarthy had demonstrated “an astute and inventive business mind capable of identifying and exploiting a real business opportunity”. The opportunity referred to was that presented by the terms of a scheme introduced by the European Community to permit the importation of limited quantities of beef from non member states under the applicable provisions of the General Agreement on Tariff and Trade (“GATT”), agreed as part of international trade talks under the auspices of the World Trade Organisation.

7 Under the relevant GATT agreement, the European Community had agreed to a quota arrangement under which beef and veal from “white listed states” (Australia, New Zealand, Norway, Sweden and Finland) could be imported and put on the market in the European Community subject to payment of a duty at a preferential rate of 20%. Initially, quotas were allocated to the member states which could then distribute them as they saw fit. In Ireland, importation of meat was relatively unknown and was indeed prohibited on veterinary grounds. In 1985, however, that derogation came to an end. One of the side effects of this was that GATT quota became available in Ireland for the first time. In 1986 it was allocated by the Department of Agriculture to existing meat processors. At a European level, a GATT quota was a valuable thing since even after meeting the cost of importation and payment of the duty, GATT meat was cheaper than the then prevailing price for beef produced within the European Community. However, at an Irish level the concept of importing beef into a country which itself was a substantial exporter of beef may have seemed like a “coals to Newcastle” endeavour. In the event, meat processors were content not to become engaged in the business of importing GATT meat and instead transferred their entitlement to entities who were willing to pay for that right (colloquially, though as Costello J. pointed out, somewhat inaccurately described as “selling the licence”). The existence of a licence which was not being used by the licensee who was therefore willing to sell it or the rights it conferred, presented a form of arbitrage opportunity that Mr. McCarthy saw and exploited.

8 In 1986 Ireland was allocated 455 tonnes of GATT quota. In 1987 the figure was 395 tonnes, and 418 tonnes and 318 tonnes in 1988 and 1989 respectively. As Costello J. stated at para. 5 of his judgment of July, 1991:

“Very quickly the meat processors found that it was much more profitable for them to sell their quotas than to manufacture GATT meat themselves. They did so, not just to the plaintiff but to other meat traders both in this country and in the United Kingdom and a brisk market arose in the purchase and sale of the quotas allocated to the meat processors.”

“In taking the view that general damages would not be awarded against the Minister for Agriculture by an Irish court for a breach of statutory duty, the learned trial judge was making a distinction between damages awarded for special damage and damages awarded for general damage, and was concluding the damages for the latter type of damage, i.e. general damage, would not be awarded against the Minister. I have been unable to find any authority to support this view. And I do not think that this is surprising. All damage suffered as a result of a tort is divided into “special damage” and “general damage” and the plaintiff is entitled to recover damages under each head. The distinction between these two heads of damage was described as follows by Bowen L.J. in his judgment in Radcliff v. Evans [1892] 2 QB 524 at p.528:-
“… It is desirable to recollect that the term “special damage” which is found for centuries in the books, is not always used with reference to similar subject matter, nor in the same context. At times (both in the law of tort and of contract) it is employed to denote that damage arsing out of the special circumstances of the case which, if properly pleaded may be super-added to the general damage which the law implies in every breach of contract and every infringement of an absolute right: see Ashby v. White 2 Ld. Raym 938. In all such cases the law presumes that some damage will flow in the ordinary course of things from the mere invasion of the plaintiff’s rights, and calls it general damage. Special damage in such a context means the particular damage (beyond the general damage) which results from the particular circumstances of the case, and of the plaintiff’s claim to be compensated, for which he ought to give warning in his pleadings in order that there may be no surprise at the trial.”
Since “general damage” is damage which the law implies in every infringement of an absolute right, and special damage means particular damage beyond general damage, it is difficult to see how the Minister could be liable for the former and not for the latter. Furthermore since both are equally caused by the wrongful act, there is no reason why the Minister should not be liable for both.”

The High Court Hearing on the Assessment of Damages
23 The hearing of the damages claim directed by the Supreme Court did not occur for a period of nine years. That in itself was patently unsatisfactory and indeed, unacceptable. When it did proceed, it took the form which could hardly have been imagined either by Costello J. when he considered that general damages were not available for Emerald’s claim or indeed, when the Supreme Court reversed that decision but considered that the damages might have been capable of assessment by that Court. The points of claim delivered on the 27th February, 2001 claimed a total of IR£15,176,000, equating to EUR€19,271,000. By the time the case opened, it was presented as a claim for €20.2 million. The Department’s response was to deny any loss at all and no open offer of settlement was made. Accordingly, Emerald’s claim to damages had to be determined by a lengthy hearing in the High Court, itself a protracted and expensive method of determination of losses and producing a result with which neither party was satisfied. Furthermore, the Department’s stance was to refuse to agree to an exchange of witness statements or to any meeting of the experts, even when that was suggested by the President of the High Court. The Department’s position was that it could not put its case as to quantum until it understood how Mr. McCarthy explained and justified his claims. Inevitably there was discussion of this position at the outset of the case and with encouragement, and indeed admirable pressure from the court, the Department agreed to exchange the accountants’ expert report. The result was that it was only after the case had commenced that both sides had in their possession the lengthy and no doubt expensively compiled reports from accountancy experts running to more than 70 pages each together with a series of appendices. Even then, the rival positions were €20.2 million and zero, and neither addressed the calculation which was ultimately adopted by the High Court judge.

24 It is worth pausing to consider the claim made by the Emerald, which was valued in such startlingly different amounts by expert witnesses whose primary function, it should be recalled, was to offer their independent expert opinion to the court. The wrong done to Emerald, as determined by Costello J. in the High Court, and upheld in the Supreme Court, was that in 1990 it had been deprived of 177 tonnes of quota and had been delayed in receiving 100 tonnes of quota. Furthermore, it had been refused new quota until the injunction granted by the High Court in late 1990 was lifted. In respect of 1991, Emerald’s position was vindicated by the decision of the High Court in the first place and by that of the European Commission shortly thereafter so that it received its full entitlement for that year, albeit later than it would have if the Department had not made the erroneous decision that the meat processors were entitled to quota in respect of imports made in 1987 and 1988. In addition to this, Emerald had received damages in respect of the loss of quota in 1990 but did not receive the funds until the Supreme Court lifted the stay in 1992. Furthermore, the case was made on behalf of Emerald that it remained at risk, insofar as if the Supreme Court appeal succeeded, it may have had to repay the award of damages and incur costs. It was said that Mr. McCarthy, who was the prime mover in Emerald, was required to devote his attention to the prosecution of the litigation with an inevitable adverse impact on his capacity to pursue the business. It was also claimed that the management of the litigation, the payment of the costs incurred, and the delay in receiving damages, all created cash flow problems for the business, together with the adverse impact on his reputation caused by the fact that the Department had not granted to it its full entitlement of quota. The primary wrong therefore, was the refusal of full quota in 1990, a wrong that was itself remedied at least prospectively by the determination of the High Court in 1991, and the decision of the European Commission, and in respect of the refusal of that portion of quota in 1990, by the award of damages. Arising from that wrong, and notwithstanding the remedies granted, it was said that Emerald had still suffered enormous losses because of the factors just identified.

25 At this point it is worth recalling that the essence of Emerald’s claim was the calculation of anticipated lost profits in the meat trading business following the changes introduced in 1990. However, the changes effected in 1990, while potentially helpful to Emerald, were not all in its favour. In particular, it rapidly became apparent that the acquisition of newcomer quota would become the critical way in which GATT quota could be a source of profitable business. However, newcomer quota was dependent upon different trade with different customers in different countries. Furthermore it could now be acquired by exporting to those countries as well as importing from them. This was effectively a new, although related, business to that in which Emerald had traded with some success between 1986 and 1989. Emerald’s case was however that Mr. McCarthy’s undoubted entrepreneurial skills and his capacity to exploit the quota system in the most profitable way would have meant that, absent the wrong done to him by the Department of Agriculture’s decision in 1990, Emerald would have traded very profitably in this new area.

26 The details of the experts’ reports in this case are now only of historical significance in this appeal because the trial judge rejected both hypotheses put forward by Emerald’s expert to justify the figure of €20.2 million. His reasons are set out in the judgment delivered herein and it is necessary to say no more than that I fully agree with him. In the event, no appeal was brought by Emerald against that determination. Instead, Emerald’s appeal is focussed entirely on the assertion that certain adjustments ought to have been made to the methodology which the High Court judge adopted in coming to his own assessment of damages. By the same token, the judge rejected the contention made on behalf of the Department that Emerald had suffered no damage beyond that compensated for already in the award of damages made by Costello J. Again, the Department’s cross-appeal does not seriously contest that conclusion but itself focuses on aspects of the judge’s methodology, such as the profit margin he allowed, which it was said had been unduly generous to Emerald.

27 The result is that the extensive experts’ reports provided just after the commencement of the trial were relevant to the hearing only in the sense that they were rejected and are almost completely irrelevant to the appeal. Much of the 17 day hearing before the High Court was taken up with an analysis of the various hypotheses contained in these reports. In the end, however, the critical piece of evidence which underpinned the judge’s assessment of damages was the third of three very short “alternative views” provided by the Department’s experts only on the eleventh day of the trial. It will be necessary to return to that evidence and the judge’s approach to it in due course but before doing so it is necessary to consider further the circumstances under which the rival contentions advanced by the parties were discarded by the judge.

28 I fully recognise the difficulties of dealing with the assessment of damages of the future loss of profits of a business which has ceased. It is all the more difficult when the enterprise in question is involved in a somewhat precarious and volatile business, has itself a very limited track record of earnings, and where the bulk of the profits claimed by it to have been lost by reason of the defendants’ wrongdoing are alleged to have been capable of being gained by the plaintiff in an aspect of the business in which it had not participated up to then. However, if court time is to be used efficiently, it means that only those disputes which really require judicial determination should reach the point of consuming both the time in court for the hearing of evidence and the time out of court for its assessment, analysis and adjudication by a judge of trial, and if necessary, on appeal. In theory, expert witnesses owe a duty to the court to provide their own independent assessment. It is only because of their expertise and assumed independence that they are entitled to offer opinion evidence on matters central to the court’s determination. If this process functions properly, there should not be wide and unbridgeable gaps between the views of experts. Where there are differences, those should be capable of identification along with the relevant considerations so that the particular issue or issues which require judicial determination should be capable of ready exposition. Ideally, all of this should occur outside a courtroom and well in advance of the trial. It is not merely that the resolution of disputed issues in a trial forum is an expensive and often frustrating process of determination; it is also that the early identification of the real areas in dispute may encourage parties to come to their own resolution which is likely to be more satisfactory to them, and certainly cheaper. It is important that experts, and particularly accountancy witnesses, do not simply accept their client’s instructions as to certain matters and then construct calculations on the basis of those instructions. If that is all that is done, then the expert report is no more than the provision of a very expensive calculator. The court is entitled to expect that such experts will apply their critical faculties and their expertise to the case being made by their clients. Furthermore, experts who are willing to provide such realistic advice to their clients are entitled to expect that the courts will, where appropriate, identify and be critical of exaggeration and lack of realism when that is detected. I do not wish to make any more detailed observations directed to the evidence in this particular case since the trial judge has not addressed this issue in his comprehensive judgment. However, by way of example only, I find it difficult to believe that if, in late 1989, Mr. McCarthy was seeking to sell some or all of the business of Emerald, any expert accountant would have advised a purchaser to pay in excess of €20 million for a somewhat precarious business, with only three years track record of limited profits, on the basis that it was capable of generating that profit over the next ten years. By the same token, I think it unlikely that any expert accountant would have advised Mr. McCarthy that the company was effectively worthless. It was partly because the figures proffered by both sides did not fit comfortably with what could be observed of the nature of the business and its prospects that the court was driven to the limited and undoubtedly somewhat rudimentary analysis which is now the focus of this appeal.

29 The genesis of the calculation relied upon by the court is to be found in an appendix to the report of the Department’s accountant which was submitted on the 19th January, 2007, day 14 of the trial. As noted above, the witness provided three different calculations described as “alternative views”. Mr. John White, who, as it happened, had been involved in the meat trading business NWL, had given expert evidence on behalf of the Department in relation to the general business and Emerald’s prospects. In the course of his evidence he had stated that NWL was, in terms of turnover, roughly seven times larger than Emerald in 1989. On this basis the accountancy witness stated as follows:

“I have also examined the information of NWL provided by Mr. John White in his evidence. Mr. White stated that NWL, in terms of turnover, was seven times larger than the plaintiff in 1989 and achieved a cumulative turnover of IR£350 million in the ten years following this. This period is one and a half years shorter than the period of the claim. Adjusting the turnover to cover the entire period of the claim the adjusted turnover would be IR£402.5 million.

Assuming that the relative size and growth rates of the companies would remain constant, it is possible to conclude that the plaintiff would have achieved one seventh the level of turnover as NWL in the period being IR£57.5 million. The plaintiff achieved a turnover of IR£4.9 million between October 1990 and September 201. One could therefore conclude that the different of IR£52.6 million represents a loss of turnover to the plaintiff.

At the profitability levels discussed above of 1.5% this loss turnover would have resulted in a lost profit of IR£0.789 million (EUR€1.002 million).”

The First Argument and the Emerald’s Motion to Admit Fresh Evidence
31 The first and principal ground of appeal argued was that while it was conceded that the trial judge was entitled to adopt NWL as a comparator, he was nevertheless wrong in assessing damages on the basis that NWL was seven times larger than Emerald and that accordingly, Emerald could be assumed therefore to have achieved one seventh of the turnover of NWL during the period 1990 to 2001. In order to make this case, Emerald sought liberty to adduce fresh evidence on the hearing of this appeal. The motion in that regard was heard at the same time as the appeal proper. This was a convenient course because it is sometimes easier to assess the import of the fresh evidence, the extent to which it could have been expected to have been available at the time of the trial, and its likely impact upon the trial, when those matters are addressed in the light of all the arguments on the appeal.

32 Here the motion sought liberty to adduce the abridged financial statements of NWL Ireland Limited for the year ending 31st December, 1989 and the nine months ending the 31st December, 1990. The grounding affidavit was sworn by Mr. McCarthy himself. He exhibited the accounts of NWL Limited and asserted that while these accounts did not themselves show a turnover figure, such a figure could be deduced from the figure shown for gross profit and the margin also referred to. In the case of 1989, therefore, the gross profit figure was IR£1.103 million and the margin referred to was 5.4% which suggested a turnover figure of IR£20,428,370. On this basis the ratio of comparison between Emerald and NWL Limited was 1:3 or 1:4, rather than the 1:7 used by the trial judge, adduced by Mr. White on behalf of the Department, and adopted by the Department’s accountancy experts as one of the alternative grounds for the calculation of damages. If this was so, then the assumed turnover and net profit figures for Emerald should have been much higher, and accordingly the damages should have been greater than those awarded. Mr. McCarthy said that Mr. White’s evidence was “false and misleading”. Significantly, however, no expert witness swore an affidavit in support of the analysis Mr. McCarthy offered.

33 Emerald acknowledged that the application could not satisfy the test set out in Murphy v. The Minister for Defence [1991] 2 I.R. 161, and in particular, the requirement set out by Finlay C.J. at p. 164 that the evidence sought to be adduced “must have been in existence at the time of the trial and must have been such that it could not have been obtained with reasonable diligence for use at the trial”. This was because, as it happened, the particular accounts referred to by Mr. McCarthy were not only available at the time of the trial, but were availed of (although not put in evidence) during the cross-examination on behalf of Emerald of Mr. Murphy, another of the Department’s expert witnesses. The thrust of this cross-examination was directed to showing that, on a gross profit basis, Emerald and NWL were broadly similar. It was explained in court on this appeal (although not on affidavit) that when NWL began to be referred to and relied upon in the evidence of the Department, Mr. McCarthy had himself gone to the company’s office and sought copies of the available accounts which were then provided to counsel for the cross-examination. However, because the matter was a developing one, it was not appreciated either that the question of the turnover of NWL would become an important issue in the calculation of damages eventually arrived at by the trial judge, or that the accounts which had been obtained could be the source of useful information in that regard.

34 A replying affidavit was sworn by Mr. White. He took issue with the suggestion that his evidence had been simply wrong and misleading. He pointed out that his evidence was not given in the context of any precise calculation of the sizes of NWL and Emerald with a view to the calculation of potential losses. Instead his evidence was directed to suggesting that the claim for EUR€20 million in damages was unsustainable since it was based on assumptions as to the likely business Emerald could have done. He submitted that this was unrealistic when viewed in the context of NWL, a larger and better resourced company. He also explained that he had not been referring to the accounts exhibited by Mr. McCarthy which were those of NWL. He said he had been referring to what he described as the statutory financial statements of NWL Group which had been audited by KPMG. Those accounts included the subsidiaries of NWL. For 1989 he accepted that they showed a turnover of IR£28.1 million. He also pointed out that the 1988 figure was IR£31 million. The evidence which he had given was in general rather than specific terms: it was that NWL’s turnover was “something in the order of £31 or 32 million”. He may have mixed up the years but even if the figure for 1989 was taken, the ratio was closer to 1:6.5 rather than 1:4. He also pointed out, significantly, that the same passage of evidence contained a separate inaccuracy which this time favoured Emerald. He had referred to NWL’s turnover figure as IR£350 million. That error was then repeated in the evidence and subsequent report of Mr. Caplin which gave rise to the alternative view calculation relied upon by the judge. In fact the correct figure was EUR€350 million. This error was in Emerald’s favour in the calculation of damages and more than outweighed the impact of his attribution of the 1988 turnover figures to 1989.

35 Mr. McCarthy then took issue in reply with Mr. White’s reliance on the audited accounts and disputed whether it was appropriate to include the results of the subsidiaries and one company in particular, Anthony McNicholl Limited, in the calculation of turnover. This was countered by the Department recalling that the nature of the business involving newcomer quota necessarily involved the establishment and maintenance of subsidiaries. On the hearing of the appeal a further dispute arose as to the effect of consolidation on those accounts. It was apparent therefore that although the motion sought liberty to adduce the evidence on the appeal, it was inevitable that if such evidence was admitted, the case would have to be remitted to the High Court for a fresh hearing which would necessarily be of some length and detail, even if limited to the use of NWL as a comparator.

36 The rules on the admission of fresh evidence on an appeal are quite strict. This is as it should be. There are very few cases in which the losing side does not regret that different witnesses were called, evidence given or points made either in cross-examination or in submission. But a trial is not a laboratory experiment where one element can be substituted and all other elements maintained and a different outcome obtained. It is important that parties are aware of the finality of litigation, and bring forward their best case for adjudication. Cases develop organically and unpredictably. One of the benefits which litigation brings at some cost is certainty. A party may reasonably dispute the merits of a conclusion, but cannot doubt that it is a conclusion. The court must make its decision on the evidence and case advanced on the day, or in this case, over the 17 days. It is partly for this reason that the rules and practice of the courts go to such elaborate lengths to attempt to ensure that both sides are fairly apprised of what is in dispute and have an adequate opportunity to prepare for the litigation. It is also why appellate courts have developed rigorous tests on applications to admit fresh evidence. There are few cases which in hindsight could not be rerun with different witnesses, evidence, arguments, or advocates, but to consider that such a course is in the interests of justice is to engage in the delusion that endless litigation is a desirable rather than a tormented state.

37 The Department relied upon the decision of this Court in Lynagh v. Mackin [1970] I.R. 180 in which the majority of the Supreme Court (O’Dalaigh C.J. and Budd J., Walsh J. dissenting) refused to grant leave to adduce further evidence on the hearing of an appeal. In that case, the plaintiff had sought a declaration in relation to a right of way. The defence had been that the right of way had been abandoned. At the hearing of the action the defendant gave evidence that this abandonment was alleged to have occurred by the construction of a silage pit in 1946 to the knowledge of the plaintiff’s husband who had therefore acquiesced in its construction. The trial judge upheld the defendant’s defence relying on this evidence. The plaintiff said that this evidence had taken her by surprise. On the appeal she sought to adduce evidence from workmen who had constructed the pit, not in 1946, but rather in 1951, at which stage the plaintiff’s husband was in ill health and actually died. It was asserted therefore that it was highly unlikely that the plaintiff’s husband had knowledge of the construction of the pit, still less acquiesced in its construction. However, the majority of the court refused to admit the evidence. In this case, the facts are a little different but in the particular circumstances of this case, and the way it developed, I consider that the fact that the accounts were in fact available at the trial, and availed of, is fatal to Emerald’s application. In my view, the test that the relevant evidence could not with reasonable diligence have been available for the trial is a reasonably flexible test. I would not wish to rule out the possibility that where a trial takes an unexpected turn, the mere fact that some information was available and could have been obtained for the trial, should not mean that it should be excluded on an appeal, particularly when the issue may be decisive, the evidence cogent, and its potential relevance could not have been known in advance of the trial. However, in this case, it is important to have regard to the precise circumstances in which the challenged evidence came to be given and the issue in respect of which it was relied upon by the trial judge.

38 It is quite clear from the way that this trial proceeded that the court was forced to rely on what was no more than a rudimentary calculation because of the unsatisfactory nature of the principal evidence of calculation of loss adduced on behalf of both Emerald and the Department. The calculation made by the trial judge was self-evidently a rough and ready one in respect of which there was a significant element of estimation on his part. It is, I think, to be inferred that he adopted this method of calculation in default of a better alternative and because it produced an outcome broadly consistent with the view he took of the likely damage done to Emerald. That was an assessment made with the undoubted benefit of having heard the case over an extended period. There were other elements to the equation: the percentage of net profit and the amount of interest payable were clearly matters of some flexibility, and it is wrong in principle to demand precision on one aspect of that equation while leaving intact other aspects of the equation, which if reviewed, could conceivably have reduced the calculation of damages. This is all the more so in the light of the acknowledged error as to the currency of the figure for turnover, an error which clearly favoured Emerald.

39 This approach is reinforced by a consideration of the nature of the issue for the court. This was the assessment of damages described by the Supreme Court as “general damages”. It is open to doubt if the term was being used in precisely the same context by Costello J. in the High Court, and Blayney J. in the Supreme Court. As Bowen L.J. observed in the portion of the judgment in Radcliffe v Evans [1892] 2 QB 524 at 528, cited in the judgment of the Supreme Court:

“It is desirable to recollect that the term “special damage,” which is found for centuries in the books, is not always used with reference to similar subject matter, nor in the same context.”

“[a]re such as the jury may give when the judge cannot point out any measure by which they are to be assessed, except the opinion and judgment of a reasonable man.”

“This type of general damages is usually concerned with non pecuniary losses, which are difficult to estimate, the principal examples being injury to reputation and defamation and the pain and suffering in cases of personal injury. Pecuniary loss is also occasionally general damages within this meaning, both in contract and in tort.

In tort there is the loss of business profits caused by the defendant’s inducement of breach of contract or passing off.”

The claim in this case is without doubt one for pecuniary losses “difficult to estimate” and for which there is no measure but the opinion and judgment of a reasonable judge. In my view the court was not here concerned with the precise calculation of special damages, particularly once it was obliged to reject the primary (and indeed to some extent the secondary and tertiary) bases of calculation proffered by the parties. Rather, the evidence provided only a structure (and, for the reasons set out above, a very loose one) for the court’s estimation of the pecuniary loss suffered by Emerald. In this regard it seems to me that at each point of this calculation the court made assumptions favourable to Emerald. Indeed, the very thrust of Mr. White’s evidence which gave rise to this issue was to the effect that any comparison with NWL would be extremely generous to Emerald. This is illustrated, as it happens, by the very portion of the evidence of Mr. White to which Mr. McCarthy refers in his affidavit. On day 12 Mr. White suggested that the projections for business provided for by Emerald were simply unrealistic:

“This [Emerald] is a company which in 1990 has no customers. So I find the whole thing out of kilter with the type of trading and the volumes of trading that I have seen in my experience on the exports side. Let me just, maybe, assist the court here. I worked for NWL as I have said in my CV for the best part of 8 or 9 years. Now NWL is a company which was a professionally run export trading meat company. It also did some business on the side in importing but 90% of its business was exporting. We ran that company on the basis of – our strategy was to find customers – constantly find new customers. Reinventing business constantly. If customers fall away, get new ones. Everybody in the company was on a plane all the time. You are not allowed to sit in your office at home doing the crossword. You were out in the market meeting customers or talking to them, finding out what they wanted, getting them to trust you, you looking at their business and seeing can you trust them. That was the requirement of an export focussed company. We had four to five traders in the office. There was a turnover in 1989 by NWL of something in the order of £31 or £32 million. I compare that to the turnover of the plaintiff company which is claimed at £4.4 million – I am not sure – I will give the company 4.4 million for comparison purposes. We are looking at NWL which is a company seven times the size of the plaintiff company in turnover terms. NWL was owned by a large Swedish operation which resourced it as much as it wanted. NWL had up to £3-3.5 million in overdraft facilities available to it at this period. NWL did a turnover in the following ten years of £350 million an average of £25 million per annum. In that period NWL had 20 newcomer companies. I set up some of those companies myself when I was in NWL. NWL, with all of its trading that it did – it did 22, I think 22 newcomer companies, earned a total of 1,850 tonnes of GATT in the ten year period following 1990, an export focussed professional trading company and doing so seven times the turnover of the plaintiff company in 1989. That is the volume of qualifying exports that NWL achieved. That is why I look at that table, Emerald’s performance required export tonnes, it does not tally with what I am seeing in my own experience. It is completely out of line.”

40 Applying Lynagh v. Mackin with due regard to the flexibility inherent in that test, I would refuse Emerald’s application to admit the fresh evidence. My conclusion in this regard is reinforced by my view that, even if the evidence were admitted, it would not lead me to direct what would be yet one further hearing in the High Court on what is fundamentally an issue of estimation. Moreover, the exercise of estimating has itself a relatively wide tolerance for differing views and in this case was made all the more difficult by the fact that the judge could not rely on the principal theory advanced either by Emerald or the Department on the quantification of damages. Counsel for Emerald sought to argue that he could advance the argument on NWL, even without the new evidence. I am however satisfied that this is not possible and, in any event, the argument cannot surmount the difficulties just identified. It follows that this ground of appeal must fail.

The Comparison of Emerald and NWL solely on the basis of Turnover
41 On the assumption that the court was correct in treating NWL as a comparator, Emerald argued forcefully that the correct basis of comparison should not have been turnover, but rather a gross profit figure. This was ultimately put in a more nuanced way in which counsel argued forcefully that even if it was correct to take into account turnover in making some comparison between the two companies, the court was wrong in excluding a comparison of gross profits which is, after all, the ultimate outturn for any business, and indeed the measure courts regularly use in awarding damages to businesses.

42 In this case it was said that this approach would have produced a quite different award, since in 1990 figures for gross profit were broadly similar, asserted as being IR£790,000 for Emerald, and IR£899,000 for NWL. It is said that this emerged from the evidence of Mr. Murphy, one of the expert accountant witnesses called on behalf of the Department and as it happens, from the passage of evidence in which the accounts for NWL had been deployed by junior counsel in cross-examination. At an abstract level, I accept that there is some logic to the proposition advanced by counsel. However, at almost every other level the argument is unsustainable. It follows from the matters already referred to earlier in this judgment that the fact that this was an assessment of general damages, and by definition therefore, an estimation of something not subject to precise calculation, that the court must have considerable latitude as to the matters it relies upon in coming to that assessment. This point cannot be addressed in the abstract. The fact is that the trial judge was driven to adopt a form of analysis which was itself dependent on a very limited amount of evidence, precisely because the positions taken by both parties in advance of the trial, and indeed during it, were so unrealistic that they could not be accepted. It is quite possible that if the case had started from the position that damages should be assessed by reference to an appropriate comparator that there could have been a focussed analysis of a number of issues aided by appropriate expert evidence. However, that did not occur here. Once the principal arguments on the both sides had been rejected, the trial judge was left with a relatively small amount of evidence upon which to approach the task, and in that regard it is impossible to say that the method he adopted, supported as it was by some evidence, was not a plausible or acceptable way of assessing damages.

43 I would however also regard the argument as flawed on the facts of this case. The argument that the gross profits of the two companies were broadly similar in 1990, and hence that Emerald’s damages should be calculated on the assumption that it would have achieved the same gross profit as NWL thereafter, has little if any support in the evidence in this case. Mr. Murphy himself did not make the comparison nor suggest it was appropriate to draw the conclusion. What occurred on day 15 was that a hypothetical calculation was put to Mr. Murphy which involved what was described as the gross profit of “approximately 150,000 gross” historically achieved by Emerald and adding to it what was described as “the amount that Costello J. awarded that comes at about IR£640,000”. Totalling those figures at IR£790,000 and suggesting that that figure could be treated as the figure for gross profit , counsel then suggested it was “broadly similar to the position of NWL at the end of 1990 … I think the figures are actually 790 versus 899”. It is notable, however, that neither during the trial nor on the application to admit fresh evidence in this appeal, was it suggested by any person with relevant accountancy expertise that it was appropriate to add these two figures together to derive a figure for gross profits for that year. It seems to me that that would be a dubious exercise, certainly if it is done for the purposes of drawing conclusions as to Emerald’s future profitability and its degree of similarity to NWL. The figure for 1990 is significantly distorted by the addition of the award of damages. To conclude from such a calculation, that when faced with the task of earning profits, not by receiving an award of damages but rather by trading in the same market, and in the same way as NWL, that Emerald would have be in a position to do so, not only successfully, but would also have been approximately six to seven times more efficient than NWL in converting any turnover gained to gross profit, would be a process of reasoning more open to challenge than any of the aspects of the judgment challenged in this case.

Net Profit as a basis for the Assessment of Damages
44 Counsel also argued that the High Court was wrong to award damages on the basis of net profit. Instead it should have awarded gross profits, making some allowance for the variable costs incurred in achieving that profit. The theory was explained very lucidly by counsel in his closing submissions as follows:

“Firstly the terms “net” and “gross margin” are apt to mislead because they can mean different things in different circumstances. Certainly in the context of what the defendant puts forward in a figure, I think of £4 million for NWL over the period, that is the equivalent of a net profit figure as demonstrated in NWL’s accounts which were sent into you. This is nothing to do with the net profit of the company after it has paid all up its costs. As you know, the basis on which a corporate plaintiff or any plaintiff makes a claim for loss of business is the value of that business, less the cost associated with obtaining that business and you deduct that. That, then, is the lost money that the plaintiff has lost. That is different from net profit, which is the figure arrived at after all of the earnings that the company are taking into account and accountants preparing net profit figure for the purpose of dividend or tax. What you look at is the value of the lost sales, taking into account the money that must have been expended to get those sales because that is what the plaintiff has lost by losing the business.”

Revenue Settlement
45 Emerald also rely on the fact that Mr. McCarthy himself gave evidence on day 3 that Emerald had fallen into arrears with the Revenue, going back to the events in 1992, and had as of 2006, what he described as a liability for tax penalties and interest of €1.5 million. It is said that the award of general damages should have included an amount to cover this loss.

46 I am unable to accept this argument. Once again it seems to mix an approach more appropriate to the assessment of special damages specifically pleaded and investigated, with what was in this case the assessment of general damages on a limited evidential record. The revenue debt was never particularised in the pleadings and there was no attempt made even in Mr. McCarthy’s evidence to draw any close, let alone causal, connection between the existence of this debt and the core of Emerald’s claim being the Department’s wrongful refusal to grant quota of 177 tonnes in 1990. That difficulty is compounded by the fact that Emerald was at the same time investing in property which was a significant drain on its resources and had an association with Emerald London to which it transferred its quota. It is a fact that the Department of Agriculture wrongly refused quota in 1990, which position was restored by the decision of the High Court and that of the European Commission the following year. It is also a fact that as of 2006, Emerald had a liability of €1.5 million to the Revue Commissioners. It seems to me to be a very dubious exercise to assume that these are in any way causally related or that such liabilities would be reasonably foreseeable as of 1990, so that a specific award ought to have been made. In fairness, I do not read Mr. McCarthy’s evidence in this way. I understand it to have been a general reference to the difficult position in which the company found itself, and perhaps a hint, not necessarily illegitimate, that if any award was to be of benefit to the company, it should be able to cover these liabilities. However, it cannot be said that the judge erred in failing to make a specific award in this regard.

Interest
47 A final point made by counsel for Emerald is that the award of interest assumed that a lump sum had not been paid in 2001, and therefore covered the period from 2001 to 2007. However, if the award was calculated on the basis of profits lost for each year between 1991 and 2001, then a more sophisticated calculation was necessary which should have calculated the interest due on the profits lost in each year from that year so that, for example, the deemed loss of profits in 1992 ought to have carried an award of interest on it for the period 1992 to 2007.

48 Once again, the internal logic of this argument is unassailable. However, there are compelling objections to it. First, the concept of assessing damages over a ten year period from 1991 to 2001 is perhaps the only thing that had survived from the expert evidence advanced on behalf of Emerald. There is no particular logic to it taking this period, and the assessment of interest was itself a rough calculation made by the trial judge. Normally, general damages do not attract interest. I do not think that the trial judge saw the award as a result of anything other than a rough calculation which arrived at a conclusion just having regard to all of the evidence. This is, in my view, how the award should be approached and unless this Court comes to the conclusion that the award is dramatically out of line with what might appear just, then I do not think that this Court should interfere with it. In the circumstances I am satisfied that the trial judge coped admirably with an extremely difficult case in which he adopted an approach which was in many respects favourable to Emerald. Accordingly, I would dismiss all grounds of Emerald’s appeal.

Cross-appeal
49 The Department were not content to accept the judgment, but sought to appeal against aspects of the decision. On this appeal the Department focussed on two points. First, the contention that a figure of three percent ought not to have been allowed for net profits, and second, an argument that the trial judge had not given sufficient weight to the fact that Emerald was heavily involved in the acquisition of property at the relevant time, which was a significant drain on Emerald’s resources.

50 The logic in applying a three percent net profit figure was the assertion made on behalf of Emerald that historically they had always had a higher net profit figure that either Emerald London or NWL. However, the Department argued that even if this was so, it was not reasonable to assume that it would continue to do so, particularly when what was being assessed was Emerald’s capacity to trade profitably in the new area of business. The Department pointed out that Emerald’s capacity to generate high percentages of net profit was due to the fact that during the relevant years its business consisted solely of turnabout business, which by definition did not involve any significant overheads. Not only was this not likely to be a feature of the future business of Emerald, it was already taken into account in the turnover actually achieved by Emerald. In other words, the €52 million turnover from which the net profit figure was assessed was all newcomer business or GATT business generated by newcomer business assumed to have been acquired in the same way as NWL had acquired it. There was no reason therefore to assume that Emerald could acquire such business more efficiently and cheaply than NWL had.

51 The Department made a slightly different point in relation to the property business of Emerald. It was suggested that the trial judge had not given sufficient weight to the significant effect this had, both in diverting the cash flow of the business to other purposes and in becoming a drain upon it. This analysis formed a significant part of the criticism made by the Department’s experts of Emerald’s contention that its financial predicament as of 2007 could be attributed to the dispute with the Department of Agriculture in 1990.

52 It must be recognised that an argument that insufficient weight was given to a point is one on which it is difficult to succeed in an appellate court, all the more so in the particular circumstances of this case. Fundamentally the argument which tells most strongly against Emerald’s grounds of appeal is equally effective against the Department’s cross-appeal. The task of the High Court in assessing general damages in this case was a necessarily crude calculation, made all the more difficult by the paucity of evidence and analysis on the one approach to an assessment of Emerald’s loss which the court found plausible. It is not possible to approach such a generalised determination as if it were a precise calculation of special damages the subject of distinct pleadings, a process of discovery, the exchange of focussed expert reports, and detailed cross-examination. To succeed in the cross-appeal it would be necessary to show either that the court ought not to have taken the approach it did at all (something which neither party now argues) or that the result arrived at departed so clearly from what was a reasonable or plausible assessment of damages that it could not be allowed to stand. In this case that would necessarily involve a further hearing in the High Court in which it would be difficult to confine to the question of the assessment of damages by reference to NWL as a comparator. However, that course could have been adopted by both parties at the outset of this litigation and was not. On the information, arguments and evidence made available to the High Court, I do not see how the determination of the High Court can be faulted. Accordingly I would dismiss both the appeal and the cross-appeal.